Circular No. 33/2005/TT-BTC guides certain provisions of the Financial Management Regulation for State-owned Companies and the Management of State Capital Invested in Other Enterprises.

CIRCULAR OF THE MINISTRY OF FINANCE

GUIDING SOME PROVISIONS OF THE REGULATIONS ON FINANCIAL MANAGEMENT OF STATE ENTERPRISES AND MANAGEMENT OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES

and managing state capital invested in other enterprises

Pursuant to Decree No. 199/2004/NĐ-CP dated December 3, 2004 of the Government promulgating the Regulations on Financial Management of State Enterprises and Management of State Capital Invested in Other Enterprises;

The Ministry of Finance guides some provisions of the Regulations on Financial Management of State Enterprises and Management of State Capital Invested in Other Enterprises as follows:

PART I

GENERAL PROVISIONS

1. The objects and scope of application of this Circular are state enterprises (hereinafter referred to collectively as enterprises) and the management of state capital invested in other enterprises as stipulated in Article 1 of the Regulations on Financial Management of State Enterprises and Management of State Capital Invested in Other Enterprises issued together with Decree No. 199/2004/NĐ-CP dated December 3, 2004 of the Government (hereinafter referred to as the Financial Regulations).

2. Enterprises assigned the task of regularly and stably supplying public goods and services ordered by the State (referred to as enterprises supplying public goods and services) and state enterprises directly serving national defense and security, in addition to implementing the provisions of this Circular, must also comply with specific regulations of the State for each type of enterprise.

3. Financial service companies (banking, insurance, investment, and capital trading...) shall comply with the current legal provisions applicable to each specific specialized field.

PART II

FINANCIAL MANAGEMENT OF STATE ENTERPRISES

A. MANAGEMENT AND USE OF CAPITAL AT ENTERPRISES

1. Registered Capital.

The registered capital of enterprises shall be implemented in accordance with Article 6 of the Financial Regulations, including:

1.1. In 2005, the representative of the owner must examine and approve the registered capital for enterprises in which the State holds 100% of the capital according to Decision No. 155/2004/QĐ-TTg dated August 24, 2004 of the Prime Minister on issuing criteria and classification lists of state enterprises and independent subsidiaries under state corporations. The approval of initial registered capital or increase in registered capital of corporations, independent companies, and parent companies must have the written opinion of the Ministry of Finance.

1.2. The registered capital of enterprises shall be determined as follows:

a/ For newly established enterprises, the registered capital shall be determined at 30% of the total investment amount to ensure normal operation of the enterprise at its designed capacity.

b/ For operating enterprises that have not yet determined their registered capital, based on the average total asset value over three years (2002-2004) of the enterprise, the registered capital shall be determined as follows:

- For independent state enterprises and independent subsidiaries (referred to as subsidiaries), the registered capital shall be determined at 30% of the total asset value on the financial statements of the enterprise.

- For corporations established and invested in by the State, the registered capital includes:

+ 30% of the total asset value on the financial statements of the corporation (excluding the value of long-term investments in subsidiaries, single-member limited liability companies owned by the corporation, and corresponding long-term investments reflecting controlling equity interests of the corporation in other enterprises).

+ 30% of the asset value on the financial statements of subsidiaries in which the corporation holds 100% of the registered capital.

+ The registered capital of single-member limited liability companies owned by the corporation.

+ The value of shares and controlling equity interests reflected in the accounting books of the corporation in other enterprises.

- For corporations formed from self-investment by companies (corporations following the parent company-subcompany model), parent companies formed from the conversion of corporations, subsidiaries, and independent state enterprises, the registered capital includes:

+ 30% of the total asset value on the financial statements of the parent company (excluding the value of long-term investments by the parent company in subcompanies).

+ The registered capital of single-member limited liability companies owned by the parent company.

+ State capital contributed by the parent company to subcompanies.

c/ For enterprises supplying public goods and services, the registered capital is the minimum necessary capital for the enterprise to fulfill its production and supply tasks of public goods and services ordered by the State.

1.3. The difference between the approved registered capital and the existing state capital at the enterprise shall be handled in accordance with Article 6 of the Financial Regulations and the mechanism for investing state capital in enterprises.

1.4. Procedures and formalities for increasing or decreasing registered capital.

a/ Adjustments to the registered capital of enterprises shall be carried out in accordance with points a and b of Clause 1, Article 6 of the Financial Regulations, or when the enterprise reorganizes (mergers, consolidations, divisions, or splits).

b/ The Board of Directors or General Director of the enterprise (for enterprises without a Board of Directors) shall report to the representative of the enterprise's owner on adjustments to the registered capital. The reporting dossier includes:

- The plan to adjust the registered capital of the enterprise.

- The company's financial statements at the time of adjusting registered capital.

Within 15 working days from the date of receiving complete and valid documents, the representative of the owner must decide on the new registered capital level for the enterprise.

After the decision is issued, the company implements registration and public disclosure of the new registered capital according to current laws.

2. Use of capital and funds of the enterprise:

The use of capital and funds of the enterprise shall be implemented in accordance with Article 8 of the Financial Regulations. Specifically, the mobilization of capital and assets of enterprises supplying public goods and services shall be carried out as follows:

2.1 Conditions for mobilizing capital and assets.

a/ Mobilizing capital and assets must ensure that it does not affect the fulfillment of the production and supply tasks of public goods and services ordered by the State.

b/ Only assets invested with state capital for direct production and supply of public goods and services can be mobilized.

c/ Capital and assets can only be mobilized between enterprises supplying public goods and services ordered by the State.

2.2 Authority to mobilize capital and assets.

a/ The Minister, Head of a ministry-level agency decides on the mobilization of capital and assets between enterprises under their management.

b/ The Chairman of the People's Committee of provinces and centrally-administered cities decides on the mobilization of capital and assets between enterprises under local management.

c/ The Board of Directors of a corporation decides on the mobilization of capital and assets between subsidiaries.

d/ Mobilizing capital and assets between companies under different ministries, sectors, and localities; when mobilizing between central ministries and sectors and localities, representatives of both ownership sides shall negotiate and agree to decide after obtaining written opinions from the Ministry of Finance.

3. Mobilizing capital:

3.1 The company's mobilization of capital shall be implemented according to Article 9 of the Financial Regulations, wherein the approval authority for specific loan contracts is divided as follows:

a/ For cases where the company borrows funds from financial institutions that apply annual credit limit contracts, the division of authority is determined according to the credit limit contract, and specific contracts within the limit are decided by the General Director or the Company Director.

b/ For other cases, the division of authority applies to each specific contract.

3.2 The interest rate on capital mobilization shall be implemented according to market rates. In the case of direct borrowing from individuals or economic organizations, the maximum borrowing interest rate shall not exceed the market rate at the time of borrowing.

3.3 The company shall account for interest on capital mobilization according to Accounting Standard No. 16 "Borrowing Costs" issued by Decision No. 165/2002/QD-BTC dated December 31, 2002 of the Minister of Finance.

4. Management of Accounts Payable

The management of accounts payable of the company shall be carried out according to Article 10 of the Financial Regulations. Among which:

4.1 Monthly, the company is responsible for evaluating and determining the ability to pay debts based on the coefficients specified in Appendix No. 5 attached to this Circular; timely debt repayment must be ensured.

4.2 Foreign exchange rate differences arising during the period and the year-end foreign currency payable balance shall be handled as follows:

a/ For operating companies, all foreign exchange rate differences (including investment loans) shall be accounted for as costs or financial activity income.

If the cost accounting results in a loss, a portion will be allocated to the following year, but the minimum allocation to costs in the year must equal the foreign exchange rate differences of payable debts due.

b/ For companies currently investing and not yet operating, all foreign exchange rate differences shall be reflected cumulatively on the balance sheet; upon completion of investment, they will be fully transferred to financial activity costs or income of the first operating year; if there is a loss, it will be allocated over subsequent years, with a maximum allocation period of 5 years (from the start of operations).

5. Preservation of State Capital in the Company.

The company is responsible for preserving state capital invested according to Article 10 of the Financial Regulations, including:

5.1 The degree of capital preservation is determined by the coefficient H:

Where:

- Total asset value: Code 270 on the balance sheet.

- Accounts payable: Code 300 on the balance sheet.

- State capital: owner's investment capital (Code 411 BCĐKT), development fund (Code 416 BCĐKT)

If the coefficient H > 1, capital has been developed; H = 1, capital has been preserved; and if H < 1, capital has not been preserved.

5.2 The establishment and use of provisions for inventory write-downs and doubtful receivables shall be carried out according to Circular No. 107/2001/TT-BTC dated December 31, 2001 of the Ministry of Finance and the following regulations:

a/ Receivables considered difficult to collect for establishing provisions include:

- Overdue receivables recorded on economic contracts, loan agreements, or debt commitments.

- Receivables not yet due but the debtor is in bankruptcy or dissolution proceedings.

b/ Provision levels are as follows:

- 30% of the value for overdue receivables under one year.

- 50% of the value for overdue receivables from one to less than two years.

- 70% of the value for overdue receivables from two to less than three years.

c/ Overdue receivables of three years or more must be treated as uncollectible receivables.

d/ Uncollectible receivables shall not establish provisions and shall be handled according to current state regulations on managing and disposing of outstanding debts.

đ/ Provisions for "inventory write-downs" shall be accounted for under "cost of goods sold."

5.3 Establishing provisions for long-term investment losses.

a/ For long-term securities investments: stocks, bonds... shall be carried out according to Circular No. 107/2001/TT-BTC dated December 31, 2001 of the Ministry of Finance.

b/ For long-term investments made by a holding company into its subsidiaries or by a holding company or company investing into a single-member state-owned limited liability company, a two-member or more limited liability company, joint-stock company, partnership, joint venture, association, and other long-term investments, provisions must be established if the invested enterprise incurs a loss (excluding losses planned in the business plan before investment).

The level of provision for long-term investment losses is calculated using the following formula:

The maximum provision for each long-term investment equals the amount invested.

c/ By the end of the next accounting period, if the invested enterprise has profits or reduced losses, the company must reverse part or all of the previously established provisions into financial income.

5.4 The establishment and use of provisions for severance benefits shall be carried out according to Circular No. 82/2003/TT-BTC dated August 14, 2003 of the Ministry of Finance.

5.5 The carry-forward of losses shall be carried out according to the current regulations of the Law on Corporate Income Tax.

B. MANAGEMENT AND USE OF ASSETS IN THE COMPANY.

1. Fixed Assets, Investment in Fixed Assets.

Investment in fixed assets, management, and use of fixed assets shall be carried out according to Articles 13, 14, 15, and 16 of the Financial Regulations and Decision No. 206/2003/QD-BTC dated December 12, 2003 of the Minister of Finance on the management, use, and depreciation of fixed assets (referred to as Decision No. 206/2003/QD-BTC), among which:

1.1 The contents stipulated in Clause 1 of Article 9, Clause 3 of Article 10, and Clause 2 of Article 13 of Decision No. 206/2003/QD-BTC are now implemented according to Article 14 of the Financial Regulations, specifically as follows:

a/ All fixed assets currently owned by the company (including unused, unnecessary assets, and those awaiting liquidation) must be depreciated according to current regulations. Depreciation of fixed assets used for production and business operations shall be recorded as business expenses; depreciation of unused, unnecessary fixed assets, and those awaiting liquidation shall be recorded as other expenses.

b/ For fixed assets that have not been fully depreciated but are damaged or lost, the cause and responsibility of the collective or individual must be determined for compensation purposes. The Board of Directors or General Director of the company, in cases where there is no Board of Directors, shall decide on the amount of compensation. The difference between the remaining value of the asset and the compensation amount and the recovered value shall be recorded as other expenses of the company.

c/ The minimum depreciation rate is determined based on the maximum usage period specified in Appendix No. 1 issued together with Decision No. 206/2003/QĐ-BTC. There is no cap on the maximum depreciation rate. The General Director or Director of the company decides on the specific depreciation rate but it must not be lower than the minimum depreciation rate.

1.2. The total asset value is determined based on the figures from the balance sheet (Code 270) of the most recent quarterly financial report.

1.3. Completed construction works that have been put into use but not yet settled shall be based on accounting records. The company shall increase the asset value according to the provisional price for depreciation recovery. After settlement approval, the original cost must be adjusted.

1.4. For leased, pledged, or mortgaged fixed assets, depreciation must be carried out according to the prescribed regime and the assets must be monitored and recovered.

1.5. The sale of small-value assets as stipulated in the Company Charter shall be decided by the General Director or Director on the method of sale: auction or negotiation. In case of negotiated sale, the selling price must not be lower than the market price.

The sale of assets attached to land must comply with the provisions of the Land Law. In cases of liquidation through dismantling or cancellation, the General Director or Director of the company shall establish a Liquidation Committee to carry out the process.

Proceeds from liquidation and sale shall be recorded as other income, while the remaining value according to the accounting books of the asset, liquidation and sale costs shall be recorded as other expenses.

2. Inventory Management.

Inventory management shall be conducted in accordance with Article 17 of the Financial Regulation and Accounting Standard No. 02 "Inventory" pursuant to Circular No. 149/2001/QĐ-BTC dated December 31, 2001, issued by the Minister of Finance. At the end of the accounting period, if the cost of inventory exceeds its expected recoverable value, a provision for reduction in inventory value must be established according to Point 5.2, Clause 5, Section A, Chapter II of this Circular.

- The cost of inventory includes: Purchase costs, processing costs, and other directly related costs.

- Expected recoverable value: Is the estimated selling price of inventory (excluding estimated completion costs and estimated selling costs).

3. Management of Receivables.

The management of receivables shall be carried out in accordance with Article 18 of the Financial Regulation and current laws regarding the management and resolution of overdue debts. Among which: The company must regularly reconcile receivables with debtors; classify debts to take appropriate measures for timely collection; identify difficult-to-collect debts to establish provisions for doubtful receivables according to Point 5.2, Clause 5, Section A, Chapter II of this Circular.

C. MANAGEMENT OF REVENUE AND EXPENSES.

I. MANAGEMENT OF REVENUE

1. Revenue of the company includes revenue from business activities and other income. b) Explanation and calculation of cost components and profit of Electricity Corporation i, including:

1.1. Regular business revenue includes:

a/ The total amount of money received from selling products, goods, and providing services during the period, after deducting commercial discounts, sales reductions, and the value of returned goods.

b/ Government subsidies when providing products and services ordered or planned by the State, where the revenue is insufficient to cover costs for the company providing public goods and services.

c/ Additional fees collected outside the selling price: subsidies, surcharges, premiums... that the company benefits from.

d/ The value of products and goods given as gifts, exchanged, or consumed internally within the company for production purposes.

1.2. Revenue from financial activities includes:

a/ Income generated from selling intellectual property rights, leasing assets; interest from loans, deposits; interest from deferred payments, installment payments; discount income from purchasing goods and services; finance lease interest.

b/ Foreign exchange gains; exchange rate differences; gains from transferring capital; dividends and profits distributed from investments outside the company (including post-tax profits of a single-member limited liability company after setting aside reserves), post-tax profits distributed according to state capital at subsidiary companies, investment development fund profits of subsidiary companies; income from securities trading (treasury bills, bonds, stocks); management fees income.

1.3. Other income includes: Income from asset liquidation and sale; amounts due but not paid; insurance compensation; customer penalties for breach of contract; tax refunds; customer bonuses; gift values received; income from the previous year that was under-recorded, recovered difficult-to-collect debts...

1.4. Methods for determining certain revenue items specifically.

a/ For goods sold on installment, revenue is recognized based on the lump sum selling price (excluding deferred payment interest). Deferred payment interest is allocated annually to financial revenue according to the contract.

b/ For products and goods used for exchange, revenue is calculated based on the selling price of the received products, goods, and services.

c/ For goods and services used for gifts, donations, or internal consumption, revenue is calculated based on production cost or cost of goods and services.

d/ For leased assets for which payment has been received in advance for multiple years, annual revenue is allocated over the lease term.

đ/ For consignment sales, revenue is the commission earned.

e/ For processed products, revenue is calculated based on the processing price stated in the contract.

f/ For products under contractual management in forestry and agricultural farms, revenue is the amount due according to the contract. In cases where revenue is collected in kind, revenue is only recognized after the products have been sold.

g/ For construction and installation products completed over multiple years, revenue is the value due corresponding to the volume of work and project components completed and accepted for payment in the year.

2. Conditions and timing for recognizing revenue.

2.1. Conditions.

a/ Revenue arising during the period must be accepted for payment by customers with valid invoices and supporting documents as prescribed.

b/ Revenue must be recorded in Vietnamese dong; in cases where revenue is received in foreign currency, it must be converted at the exchange rate of the bank where the enterprise maintains its transaction account.

2.2. Timing for recognizing revenue.

a/ The time when the company has transferred ownership of goods or products; completed the provision of services to the buyer; completed the contract; or issued an invoice for sales.

b/ For goods or products sold through agents, revenue is recognized when the goods sent to the agent have been sold.

c/ For financial activities, the timing for recognizing revenue shall be as follows:

- Interest on loans, deposits, bond investments, bills, deferred payments, installment payments, royalty fees... shall be recognized according to the loan agreement term, lease term, sale term, or interest payment period.

- Dividends and profits distributed shall be recognized upon receipt of the resolution or decision to distribute.

- Capital gains from the transfer of capital, foreign currency sales profit, and exchange rate differences arising from business operations shall be recognized when transactions or operations are completed.

- Exchange rate differences resulting from revaluation of receivables, payables, and foreign currency balances shall be recognized at year-end financial reporting.

II. MANAGEMENT OF EXPENSES AND COST OF GOODS SOLD.

1. Business operating expenses of the company.

Expense management shall be carried out in accordance with Article 23 and 24 of the Financial Regulations and the following specific provisions:

1.1. Raw material, material, fuel, power... costs (referred to as material costs) shall be calculated based on actual consumption rates and actual warehouse prices.

a/ Consumption rate: The General Director establishes consumption standards for each type of material for each product, submits them to the Board of Directors for approval, and is responsible for the accuracy of these standards.

For companies without a Board of Directors, the Director establishes, issues, and is responsible.

During implementation, if actual material consumption exceeds the standard, the cause and responsibility must be determined and compensation processed. Compensation money is recorded as other income. If actual consumption is lower than the standard but still ensures product quality, the person implementing may be rewarded. The reward amount does not exceed the value of materials saved in the year. Reward money is recorded as production and business expenses.

The General Director or Director decides on the compensation or reward amount. The company must regularly review and adjust standards to match reality.

b/ Actual material warehouse price:

- Material purchase price includes:

+ Purchase price recorded on the seller's invoice. If self-imported materials, the purchase price is the foreign currency price converted to Vietnamese dong at the exchange rate of the bank where the company maintains its transaction account plus (+) import tax and additional charges (if any) minus (-) trade discounts and reductions due to non-compliant specifications or quality, which should be deducted from the purchase price.

+ Transportation costs, loading and unloading costs, storage costs, insurance, losses, warehouse rental fees, pre-processing fees before warehousing (if any), selection and recycling fees.

- Self-manufactured material price includes:

+ Actual warehouse price of materials

+ Processing costs.

- Outsourced processing material price includes:

+ Actual warehouse price of materials

+ Processing fees.

Materials entering and leaving the warehouse, processing and manufacturing costs, transportation and storage costs, procurement costs... must have invoices and supporting documents as prescribed by current laws. In cases of purchasing agricultural, forestry, aquatic products... directly from producers without invoices or supporting documents as prescribed, a detailed purchase list must be established, clearly stating the seller's name, address, quantity of goods, unit price, total amount, and signature of the seller. The company director approves expenditures based on the purchase list and bears legal responsibility for the accuracy and truthfulness of the list.

For tools and equipment, their value is allocated to expenses within two years based on usage time.

1.2. Depreciation costs of fixed assets shall be calculated in accordance with Decision 206/2003/QĐ-BTC and Point 1.1 Clause 1 Section B Chapter II of this Circular.

1.3. Wages, salaries, and allowances with salary characteristics that must be paid; midday meal expenses as prescribed. Midday meal expenses for workers shall be decided by the Board of Directors or the Director for companies without a Board of Directors, in line with production and business efficiency, and monthly expenses shall not exceed the minimum wage stipulated.

1.4. Contributions to social insurance, trade union funds, and health insurance for employees according to current regulations.

Expenses for Party and mass organization activities are taken from the budget of these organizations; if insufficient, they are recorded as business expenses.

1.5. External service costs are expenses serving the company's production and business activities, including:

a/ Major repair costs of fixed assets shall be recorded as expenses in the year based on actual spending, if there is a loss, part of it will be allocated to the next year. For major repairs of special fixed assets according to cycles, costs are accrued in advance according to the budget, with the accrual time being the end of the fiscal year. When performing major repairs, if actual spending exceeds the accrued amount, the difference is recorded as an expense; if less, it reduces expenses.

b/ Transaction, brokerage, hospitality, marketing, promotion, advertising, meeting expenses are recorded based on actual occurrences. The company must issue management regulations for these expenses, publicize and announce them openly to employees for implementation and monitoring. The General Director or Director decides and is responsible for specific expenditure levels.

The company shall not pay commission to sales agents, designated customers, managerial positions, and employees directly responsible for supplying and consuming the company's products. However, payment of commissions in export transactions and brokerage services to foreigners shall be carried out in accordance with Circular No. 01/2000/TT-BTC dated January 5, 2000, issued by the Ministry of Finance; payments for activities promoting exports supported by the State shall be made in accordance with Circular No. 86/2002/TT-BTC dated September 27, 2002, issued by the Ministry of Finance.

c/ Rent for fixed assets according to the contract. If paid in one lump sum for multiple years, it shall be allocated to business expenses over the number of rental years.

d/ Travel expenses according to the standard set by the Board of Directors or the General Director for companies without a Board of Directors, which must be publicly announced for inspection and supervision.

1.6. Provisional expenses: reduction in inventory value, long-term investment losses, bad debt, unemployment benefits as stipulated in Points 5.2, 5.3, and 5.4 Clause 5 Section A Chapter II of this Circular.

1.7. Advance provision for warranty costs: for products and construction projects spanning multiple years, as per contract or agreement with customers. Upon expiration of the warranty period, if actual expenditures exceed the advance provision, the difference shall be recorded as an expense; if less, it shall be recorded as other income.

For construction companies engaged in housing and infrastructure development, where construction periods extend two years or more, with advance payments received and recorded as revenue but incomplete construction volumes, they may pre-provision corresponding costs for unfinished construction volumes.

1.8. Other monetary expenses as prescribed in Point e Clause 1 Article 23 of the Financial Regulations. Among them:

a/ Unemployment and job loss compensation for employees at the current legal rate from the Unemployment Compensation Reserve Fund, with any shortfall recorded as a business expense.

b/ Training expenses for enhancing management capabilities and skills of employees.

- If the company has its own training facilities, the expenditure level shall be based on the national standards. In cases exceeding the standard, the General Director or Director shall decide and bear responsibility.

- For short-term training within the company, the expenditure level shall be decided by the General Director or Director who will also bear responsibility.

- For outsourced training, the expenditure level shall be based on the contract signed with the training facility.

c/ Medical expenses including those for employees as stipulated by current state regulations, calculated based on actual expenditures outside the scope of social insurance coverage and employee contributions.

d/ Research and development expenses, technological innovation, and new product testing approved and responsible for by the Board of Directors or the Company Director.

2. Financial activity expenses:

Content of expenses as prescribed in Point i Clause 1 Article 23 of the Financial Regulations.

3. Other expenses:

Content of expenses as prescribed in Clause 2 Article 23 of the Financial Regulations.

4. Expenses not included in production and business costs as prescribed in Clause 3 Article 23 of the Financial Regulations.

5. Expense Management:

Implemented in accordance with Article 24 of the Financial Regulations, including:

For companies operating in monopoly sectors, in addition to financial statements prepared and submitted according to current regulations, at the end of each fiscal year, the company must prepare a Report on the Implementation of Production and Business Costs according to the model specified in Appendix 2 attached to this Circular and submit it to the representative of the owner and the finance authority (Department of Finance for enterprises managed by localities; Ministry of Finance for enterprises managed by the central government).

6. Product cost, service consumption expenses.

6.1. Total cost of all products and services consumed during the period as prescribed in Clauses 1 and 2 Article 25 of the Financial Regulations.

6.2. Principles and methods for determining product costs and service expenses as follows:

a/ Production costs of products and services include:

- Costs of raw materials, materials, fuel, and power used directly in producing products and services.

- Payments to direct production workers such as wages, salaries, allowances with wage characteristics, mid-shift meal expenses, social insurance, health insurance, and trade union fees.

- Common production costs: common costs incurred in workshops and business departments such as wages, allowances, mid-shift meal expenses, material costs, tool and equipment costs, depreciation of fixed assets, external service costs, and other monetary costs.

b/ Total costs of sold products and services include:

- Production costs of products and services as stipulated in Point 6.2.a Clause 6 Section C Chapter II of this Circular.

- Sales expenses: costs incurred in the process of selling products, goods, and services such as wages, allowances payable to sales personnel, agent commissions, brokerage commissions, marketing, packaging, transportation, storage, depreciation of fixed assets, material costs, packaging materials, tools, and other monetary costs.

- Corporate management costs: management costs related to business operations and administrative management, and other common costs associated with corporate activities.

All sales and corporate management costs are transferred to the products and services sold in the year to determine business results.

For products with production periods exceeding one year, corporate management costs incurred in the year are allocated to unfinished products.

6.3. Accounting for costs of goods and services subject to VAT:

- If the tax deduction method is applied, costs do not include input VAT.

- If the direct method is applied, costs include input VAT.

D. REALIZED PROFIT AND DISTRIBUTION OF PROFITS.

1. The company's realized profit for the year is determined in accordance with Article 26 of the Financial Regulations.

2. After offsetting previous year losses and paying corporate income tax as prescribed by the Law on Corporate Income Tax, the company's realized profit is distributed in accordance with Article 27 of the Financial Regulations, including:

a/ Average self-raised capital of the company for the year calculated by dividing the total balance of raised capital at the end of each quarter by four quarters

b/ The salary serving as the basis for establishing the reward and welfare fund as stipulated in Clause 7, Article 27 is the actual salary of the company.

3. The purpose of using the funds of the company and the authority to decide on the use of these funds shall be carried out in accordance with Article 28 of the Financial Regulation.

4. The distribution of profits and the establishment of funds in 2004 shall be implemented in accordance with the provisions of Circular No. 64/1999/TT-BTC dated June 7, 1999 of the Ministry of Finance.

D. FINANCIAL PLAN, ACCOUNTING SYSTEM, STATISTICAL RECORDS AND AUDIT

1. The financial plan of the company shall be implemented in accordance with the provisions of Article 29 of the Financial Regulation. The financial plan indicators shall follow Model Appendix No. 1 attached to this Circular.

2. The accounting system, statistical records, audit, and financial reporting shall be carried out in accordance with the provisions of Articles 30 and 31 of the Financial Regulation and current laws and regulations regarding auditing and accounting.

E. STATE ENTERPRISE GROUP

The management of capital and assets, revenue, expenses, and profit distribution of state enterprise groups shall be implemented in accordance with the provisions of Chapter III of the Financial Regulation and Chapter II of this Circular.

CHAPTER III

MANAGEMENT OF STATE CAPITAL INVESTED IN OTHER ENTERPRISESC

The management of state capital invested in other enterprises shall be carried out in accordance with the provisions of Chapter IV of the Financial Regulation and the following provisions:

1. Increasing capital investment and recovering state capital in other enterprises.

1.1. The authority to decide on increasing capital investment and recovering state capital in other enterprises shall be in accordance with the provisions of Article 50 of the Financial Regulation.

1.2. The increase in capital investment and recovery of state capital in other enterprises must comply with the law and the charter of the other enterprise.

1.3. Procedures and formalities for selling state capital in other enterprises.

a/ Selling state shares in joint-stock companies shall be carried out in accordance with the regulations for the first sale of shares when state-owned enterprises are converted into joint-stock companies (Part B, Section V of Circular No. 126/2004/TT-BTC dated December 24, 2004 of the Ministry of Finance guiding the implementation of Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned companies into joint-stock companies), including:

- The representative of state capital at the joint-stock company reports to the owner's representative for consideration and decision on the policy of selling off shares.

- The owner's representative selects and signs a contract with an organization to advise on the auction of state shares. The advisory organization builds a sales plan, proposes the offering price, and submits the sales costs to the owner's representative for decision.

- The total face value of the shares sold through auction under 5 billion dong shall be auctioned at financial intermediaries; from 5 billion dong and above, they shall be auctioned at stock exchange centers.

- Proceeds from the sale of state shares, including deposits not refundable to investors (after deducting sales costs) shall be deposited into the Enterprise Restructuring Support Fund at the Ministry of Finance or transferred back to the state-owned company in accordance with Article 51 of the Financial Regulation.

For joint-stock companies that have been listed or registered for trading at stock exchange centers, the state capital representative at the joint-stock company shall build a plan to sell off shares and report to the owner's representative for approval to sell on the stock exchange center.

b/ Selling state capital in limited liability companies and joint ventures:

- The representative of state capital at other enterprises builds a sales plan and proposes a selling price to the owner's representative for decision.

- Proceeds from the sale of state capital (after deducting sales costs) shall be deposited into the Enterprise Restructuring Fund or transferred back to the state-owned company in accordance with Article 51 of the Financial Regulation.

2. Salary, allowances, bonuses, and benefits for representatives.

a/ For representatives participating full-time in the Management Board of other enterprises, salaries, allowances of a salary nature, bonuses, and other benefits shall be paid by the other enterprise.

b/ For representatives participating part-time (兼任) in the Management Board of other enterprises: salaries and allowances of a salary nature shall be paid by the appointing unit; responsibility allowances, bonuses, and other benefits shall be paid by the other enterprise. If the representative participates concurrently in the Management Boards of multiple other enterprises, they shall enjoy responsibility allowances, bonuses, and other benefits from each of these places.

3. System and Reporting Indicators:

3.1. Representatives shall be responsible for:

a/ Based on the financial statements and other reports of the enterprise, prepare the Enterprise Report according to Model Appendix No. 3 attached to this Circular and report to the owner's capital representative.

b/ Quarterly and annually, compile financial indicators according to Model Appendix No. 4 attached to this Circular; analyze and evaluate business results, management and use of capital in the enterprise, payment capacity, profit distribution, and other benefits, propose measures to resolve difficulties and obstacles to improve the efficiency of state capital investment in other enterprises.

Reports shall be submitted to the owner's capital representative no later than 15 days after the other enterprise submits its financial statements (quarterly, annually) in accordance with current regulations. In cases where the owner's capital representative is the Ministry of Finance but has delegated authority to the head of a ministry or sector to appoint a representative, the representative must submit the report to the Ministry of Finance and simultaneously send one copy to the agency that decided to appoint the representative.

c/ In addition to regular reports mentioned above, representatives must report to the owner's capital representative about the situation of the enterprise in cases where significant issues arise affecting the business results of other enterprises requiring guidance from the owner or when requested by the owner's capital representative.

3.2. The owner's capital representative shall be responsible for:

- Implementing rights and obligations as stipulated in Article 45 of the Financial Regulation.

- Based on the financial statements of other enterprises and reports from representatives, periodically every six months and annually, compile the situation of capital investment in other enterprises (Model Appendix No. 4 attached to this Circular) by type of enterprise with state capital investment, analyze and evaluate production and business conditions, financial status of the enterprise, and submit to the Ministry of Finance for consolidation.

PART IV

IMPLEMENTATION ORGANIZATION

This Circular shall take effect fifteen days after its publication in the Official Gazette. All previous regulations on capital and asset management, revenue and expenditure management, profit distribution and reserve fund establishment in state-owned enterprises and state capital investment management in other enterprises (listed in Appendix No. 6 of this Circular) are hereby abolished.

During implementation, if any difficulties arise, state agencies and state-owned companies are requested to report them to the Ministry of Finance for study and amendment./.